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“Baby Step Number 1” is to save $1000 for an Emergency Fund
To take control of your money situation, the first thing you need to do—even before getting out of debt—is to save $1,000.
That $1,000 provides a cushion between you and life—a flat tire, an unexpected doctor’s visit, a leaky pipe under your sink. When you save $1,000 before you start getting out of debt, you can cover any unexpected smaller emergencies without breaking a sweat.
Here’s how to get an extra $1,000 between you and life’s unexpected emergencies:
1) Start budgeting. When you create your first budget, you’ll be shocked at how much money you are spending without even realizing it. With the budget, you’re giving every dollar a name—and one of the top names on that list should be your $1,000 emergency fund. Don’t use “leftover” money at the end of your budget to put aside for savings. It will never happen. Determine the amount you can save and do that first. Then you can tell the rest of your money where to go.
Related: The Simple Way to Make a Budget
2) Cut back on spending. Once you have your budget in place, you’ll see the areas where you’re overspending. How often are you spending thirty dollars a week on coffee? Make your true needs (food, shelter, utilities, transportation and clothes) a priority and cut back in your “wants” to save that $1,000 quicker.
3) Take a look at your clutter. Look at the stuff just sitting in your garage or piled up in your attic—can you sell it? An old television, an extra couch you never use, the treadmill that’s become your coatrack . . . take a long, hard look at your clutter and see what you can get rid of for cash.
4) Re-examine your reoccurring expenses. Chances are, you could be saving money on your monthly fixed bills. These are easy to overlook because you’ve paid the same amount every month for the past 24 months. Are you missing out on special rates for expenses like your cell phone or cable?
Related: 4 Ways to Lower Your Cell Phone Bill
5) Believe in yourself. No matter what tricks you use or how much money you can dig up, you won’t hit a savings goal if you don’t believe you can do it. Procrastination and making excuses will cause you to fail every single time. Be intentional and get after it! When you have that type of attitude, you’ll save $1,000 much quicker than you think.